TVA Generation Mix: Celebrating Wins for Consumers

This past weekend, the Chattanooga Times Free-Press published an article updating readers on the Tennessee Valley Authority’s multi-year program to transition its generation mix. Nearly a decade ago, in 2011, a lawsuit by environmental groups led to a settlement agreement. TVA has lived up to the agreement by taking sweeping actions to reduce emissions while providing affordable and reliable power to a growing population.

To be sure, TVA looks different today than it did in 2011. Over the past seven years, the utility has shut down 33 coal units and updated other coal units to reduce emissions. It has also brought on more nuclear power, combined-cycle gas, and renewable power. At the same time, the utility has protected its customers with stable power rates, even providing modest rate reductions.

There are many reasons why this particular story unfolded the way it did, and the article does a commendable job pointing out some of those reasons. After all, this period saw multi-billion dollar investment and aggressive action by TVA. Sustained low natural gas prices also contributed heavily, blunting the blow of shutting down very cost-effective coal-fired units. The introduction of a nuclear unit also helped lower generation costs. At the end of the day, TVA’s plan came together for its customers, to the credit of diligent planning, hard work, and good fortune in terms of natural gas markets. This outcome is worthy of applause.

Disappointingly, the author chose to devote part of his article to calling out “PACE and other pro-coal advocacy groups” for warning “that TVA’s plans to shutter 7,000 MW of coal-fired electricity generation would boost electric rates in the Tennessee Valley by more than 20 percent and cut 65,000 jobs and $900 million of manufacturing output in Tennessee.”

We did issue a report from an internationally recognized research firm in February 2016 warning of the potential negative outcomes of shuttering some of TVA’s coal assets. Based on the information available at the time, those concerns were valid. And as an organization committed to playing devil’s advocate on behalf of power customers, duty compels us to speak up when we believe energy conversations need balance.

PACE still remains highly concerned about the growing reliance on natural gas by TVA and other utilities nationwide. Others, including system operators like MISO, the Federal Energy Regulatory Commission (FERC), and national voices such as Secretary of Energy Rick Perry share the same concerns. This issue was central to the concerns PACE expressed about TVA’s plan in 2016, and something we will continue to highlight to policymakers. Relying increasingly on an energy source with an historically volatile price will eventually have consequences. Families and businesses will ultimately bear those consequences and resulting costs.

We can’t be certain of the the intent of this Monday-morning quarterbacking by the Chattanooga Times Free-Press, but we do know that many attempts have been made to discount customer-focused groups like PACE in the TVA Integrated Resource Planning process, in which PACE plays an active role. We also note that while the newspaper quoted representatives of the Sierra Club and the Southern Alliance for Clean Energy (both supporters of TVA shutting down coal altogether), no one from the Chattanooga Times Free-Press ever contacted PACE for our perspective. We would have been glad to explain our point of view both then and now.

In our view, customers always deserve to know the potential consequences of plans supported by environmental groups. For example, if Sierra Club and the Southern Alliance for Clean Energy have their way, TVA would be forced to prop up additional incentives for self-generated renewable power and to devote more resources to “solar and wind in the Valley.” This may be in the best interest of renewable energy companies, but it might pose new costs and little value for regular customers.

Even though TVA has very recently invested in combined-cycle natural gas plants that are significantly cleaner-burning than coal, SACE now insists that “gas continue[s] to cause serious harm to the environment and human health, and [is] no bargain.” The Sierra Club, too, continues to claim that wind and solar power can replace around-the-clock resources like coal and nuclear power, a claim with no basis in fact. The media often refuses to challenge claims such as these, which is why PACE does.

In the future, we hope that media sources such as the Chattanooga Times Free-Press allow PACE to weigh in on matters as important as these, especially when an article is discussing our organization’s point of view. That only seems fair. Either way, PACE will continue to look out for customers and voice our concerns, regardless of whether those concerns are popular or jive with narratives constructed by the media and environmental groups. Policy makers and the families and businesses they are bound to represent deserve no less.